Led by a nearly 700-point drop in the Dow Jones Industrial Average, U.S. financial markets sank deeper in one day than ever before Monday, the first day of trading following last Tuesday's terrorist attacks on the World Trade Center and the Pentagon.
The Dow fell 7.1 percent, or 684.81 points, to a close of 8920.70, the lowest closing average for the nation's most famous market barometer since 1998. The fall was the largest point drop in the Dow's history.
The Nasdaq over-the-counter average dropped 115.75 points, to a close of 1579.55, while the Standard & Poor's 500 average plummeted 53.77 points, to 1038.77.
The market decreases occurred despite a decision by the Federal Reserve to cut interest rates by a half percentage point an hour before trading began.
Among the companies who saw their share prices fall, the airlines victimized by Tuesday's hijackers plunged the deepest. Shares of AMR Corp., the parent company of American Airlines, lost $11.70 to a price of $18 per share. UAL Corp., the parent of United Airlines, fell even further: The price of its shares dropped $13.32 to $17.50 per share.
Clare W. Zempel, chief economist for Robert W. Baird in Milwaukee, called the day's drop a 'relative win,' considering that the market remained open all day and the S&P 500 fell less than 5 percent, while foreign markets fell an average of 8 percent during the four days U.S. markets were closed last week.
Zempel added that she does not expect Monday's sell-off to cause any long-term damage to the U.S. economy.
'There is a pattern to crises that affect the market: After initial declines, the market is usually higher after three months and almost always higher after six months,' Zempel said. 'Given what happened last week, it is not a surprise that stock markets have slipped. Based on the historical record, however, declines now do not preclude future rebounds here and abroad.'
UW-Madison finance Professor Elizabeth Odders-White also said she was optimistic about the nation's outlook for a long-term economic rebound.
'If you're talking about investors who are in for the long run, this should not affect them at all,' Odders-White said.
She added that the U.S. government would not let the airlines flounder too much.
Indeed, President Bush indicated Monday he would support a bailout of the airline industry as well as a new tax cut and increased government spending to stimulate the economy.
Airline executives said to survive through the first half of next year, the industry will need $24 billion in federal assistance, more than the $15 billion Congress has been considering. And some analysts warned that even that amount could be insufficient to save some of the weaker airlines.
Most major U.S. airlines have announced plans to cut back at least 20 percent of their operations and layoff employees.
FBI questions five detained in connection with attacks
The FBI is investigating whether some people detained as part of the probe into the Sept. 11 attacks on the Pentagon and World Trade Center may have been planning other hijackings that went awry, according to law enforcement officials.
The examination so far has centered on five foreign-born men now being questioned by the FBI in New York, all of whom were detained or arrested under circumstances that authorities consider suspicious. In each case, there were similarities to the attacks that the FBI said were committed by 19 suicide hijackers who commandeered four aircraft.
Pakistan pressures Taliban
Pakistani officials sent to Afghanistan to seek the surrender of Osama bin Laden extended their visit Monday after Afghanistan's ruling Taliban militia said a council of Islamic clerics would decide whether to hand over the suspected terrorist.
Official Taliban radio said the Islamic movement's leader, Mohammad Omar, had decided that the fate of bin Laden should be decided by the group of senior clerics, who will meet Tuesday in the Afghan capital, Kabul. The Pakistanis, who met with Omar Monday in the southern Afghan city of Kandahar, traveled to Kabul to await the decision. U.S. officials have identified bin Laden as the prime suspect behind last week's terror attacks in New York and Washington.
The Pakistani delegation met for more than three hours with Taliban leaders, according to Taliban spokesperson Abdul Hai Mutmaen. The Pakistanis reportedly told the Taliban that giving up bin Laden, whom they have harbored for the last five years, could spare Afghanistan from military attack by the United States.
In recent years, bin Laden has become increasingly influential within the Taliban, providing the group with funding and weapons for its effort to seize the last pockets of Afghanistan it does not control. One Pakistani official in the United States said it would be 'a miracle' if the Taliban surrendered a man who has become not only their benefactor but a hero in parts of the Muslim world.
Taliban officials have said repeatedly they will protect bin Laden unless presented with proof of his involvement in the attacks. They have warned they will attack any country that supports a U.S. assault, including Pakistan.
